When demand exceeds supply, prices rise. While the problem of housing affordability has many facets and effects, that inescapable fact explains a lot about why so many North Carolinians struggle to afford the homes they’d like to buy or rent.
It’s not as if there are many idle homebuilders in our state. In fact, by one measure North Carolina is doing better than average. When the Manhattan Institute compared job growth to new housing permits in 20 fastest-growing metropolitan areas, the three North Carolina metros on the list fared very well: Durham-Chapel Hill (#1), Raleigh-Cary (#3), and Charlotte-Concord-Gastonia (#4)
Alas, this isn’t the whole story. It misses an important stock-and-flow dynamic. Yes, over the past decade North Carolina metros have been more accommodating than most of their peers in allowing new home starts to keep up with new residents. But our state began the decade with too many consumers chasing too few housing units. Despite recent construction, we aren’t adding enough housing stock.
Take a look at the most-recent affordability data from the National Association of Home Builders and Wells Fargo Bank. Their study compares the median sales price of homes to the median income in each jurisdiction. For the first quarter of 2021, NAHB/Wells Fargo produced affordability scores for 233 metros. North Carolina’s highest-ranking places for home affordability were Fayetteville (32) and Winston-Salem (58).
Greensboro-High Point (96), Raleigh-Cary (102), Durham-Chapel Hill (113), Charlotte-Concord-Gastonia (124), and Asheville (150) face bigger challenges. Our housing markets aren’t as locked up as those in California or New York, to be sure. That’s one reason why Californians and New Yorkers (among others) continue to move here in significant numbers. But home affordability in North Carolina is still a worrisome problem.
Most policymakers agree with that, of course. Where they disagree is how North Carolina state and local governments should go about trying to address it.
For decades, my John Locke Foundation colleagues and I have recommended that we loosen housing and zoning regulations to make it easier to provide housing to people of modest means. Yes, that means allowing more units per acre of (increasingly pricey) land. It means duplexes and triplexes. It means allowing homeowners to rent out spare rooms. It even means allowing more manufactured housing within municipal limits (modern units bear little relationship to old-fashioned trailers, by the way).
A serious effort to promote affordability in North Carolina also means reducing how long it takes — from planning stage to final construction — for homebuilders to bring new inventory to market. It means streamlining the process for obtaining permits. It means letting producers and consumers meet in the middle, trading off amenities for price, rather than imposing housing codes that reflect the preferences of existing residents over those of newcomers.
Such an effort, then, isn’t just about the precise wording of laws or the detailed analysis of regulations. It’s about public attitudes.
Do people other than buyers and sellers have a legitimate interest in the amount and type of housing stock erected in the community? To a limited extent, yes, regarding public services such as roads or water and sewer. That interest need not result in excessive regulation, however. Localities can and do charge developers directly, and thus prospective newcomers indirectly, for the cost of adding infrastructure capacity to accommodate them. Such a practice is not about saying no. It’s about saying yes — at the right price.
Let’s be honest, though: when the “neighborhood” resists new construction or higher density, it’s not just about traffic or stormwater runoff. Preexisting residents want to keep “things” the way they were when they moved in. More trees. Fewer people driving or walking by. Structures and landscapes that existing residents admire when they drive or walk by.
Here’s a principle we should all take to heart: when we buy or rent a place to live, we don’t purchase a right to oversee how many neighbors we’ll have — or how they choose to live their lives.
John Hood is a Carolina Journal columnist and author of the new novel Mountain Folk, a historical fantasy set during the American Revolution.